EXPAND YOUR BUSINESS INTERNATIONALLY FINANCING SUPPORT TO ORGANIZATION OF WOMEN IN INTERNATIONAL TRADE

EXPAND YOUR BUSINESS INTERNATIONALLYFINANCING SUPPORT TO

ORGANIZATION OF WOMEN IN INTERNATIONAL TRADE

2 G L O B A L T R A N S A C T I O N B A N K I N G

Product SpecialistsTRADE FINANCE

SOLUTIONS

Home IntroductionSupply Chain Financing Solutions

EDC ProductsThe ScotiabankNetwork Advantage

Commodity Financing

Risk Maps for Trade Finance Products

Find Out MoreTable of Contents

INTRODUCTION

EXPORT DEVELOPMENT CANADA (EDC)

Federal Crown Corporation Partners with banks to support

exporters Scotiabank works with EDC to

provide solutions for exporters in Canada and abroad

Performance Security Guarantee

EDC Why Use EDCEDC Solutions andthe transaction Cycle

EDC ProductsExporter Guarantee Program

Financial SecurityGuarantee

Foreign ExchangeGuarantee

AccountsReceivables Insurance



SOLUTIONS



Commodity Financing



Working Capital Solutions

Risk Mitigation Tools

Financing

EDC









SOLUTIONS



Commodity Financing



Why Use EDC?1. Allows Exporters to increase funds available to

expand export business without tying up working capital

2. Provides guarantees to banks to enhance commercial credits

3. Allows the banks to provide more innovative solutions for our customers

4. It is easy to use

Working Capital Solutions

EDC









SOLUTIONS



Commodity Financing



EDC solutions and the transaction cycle

FINAL PAYMENT

Warranty Period 6 months - 2 years

Warranty Bond (10%)

Delivery and Installation

Bid Bond PSG (5%)

Bid Stage

6 months

SHIPMENT

CONTRACT SIGNING

MANUFACTURING PERIOD

PRE-CONTRACT

Receivable - 90% coverage

EGP

PSG

ARI

FXG

EDC SOLUTIONS AND THE TRANSACTION CYCLE









SOLUTIONS



Commodity Financing



Product Solution

EGP Working Capital or Term loans for pre-export financing

PSG Foreign Contract Obligations (foreign guarantees for bids, performance)

FSG Foreign Payment Obligations

FXG Foreign exchange

ARI Insurance for foreign account receivables to support working capital loans

Scotiabank named BEST

TRADE FINANCE BANK

in Canada for the third time

in four years

EDC PRODUCTS









SOLUTIONS



Commodity Financing



EDC PRODUCTSExporter Guarantee Program (EGP)

What is it ?

• It is a guarantee that covers up to 75% of advance pre-shipment loans, operating facilities, term loans in support of specific contracts, general corporate purpose financing or the acquisition of a foreign asset or company by providing additional security.

How does it work? (see flow chart)

EGP supports the following scenarios:

1.Contract Specific (pre-shipment) – EDC guarantees up to 75% of the facility.

2.Revolving Facility (pre-shipment) – supports multiple contracts. The facility is capped and EDC approves each PO under the line Guarantee usually terminates a month after the lender's annual review date. 3.Operating Facility –EDC guarantees up to 50% of the operating line to help with the general operations of the business..

4.Term Loans - supports the preparation of investment related to specific export contracts ( normally up to 5 years.) EDC guarantees up to 50% of the term loan.

Benefits

EGP Overview

What is it?









SOLUTIONS



Commodity Financing



EDC PRODUCTSExporter Guarantee Program (EGP)

Provides 75% of credit guarantee to support pre-export credit

EGP Sales Contract to be delivered in 6

months

Provides pre-export credit facility

CUSTOMER

THE BANK

FOREIGN BUYER

Benefits

EGP Overview

What is it? EGP Overview









SOLUTIONS



Commodity Financing



What is it ? • It is a 100% irrevocable second-demand guarantee

issued by EDC to support a bank guarantee. (SBLC/LG).

• It covers any type of contractual bonds like Performance, Advance Payment, Bids, Warranty, etc.

How does it work? (see to flow chart)

• EDC issues the PSG guarantee in the bank’s favor, covering 100% of losses if the buyer, for any reason, makes a demand against the bank’s instrument (LG /SBLC).

• These guarantees can be foreign or local (if there is evidence of a product/service being exported).

EDC PRODUCTSPerformance Security Guarantee (PSG)

Why use it ? • It eliminates the collateral typically asked by a

bank when issuing foreign guarantees because EDC provides its support improves permitting a bank to free up W/C facilities for the customer.

Benefits

PSG Overview

What is it?









SOLUTIONS



Commodity Financing



EDC PRODUCTSPerformance Security Guarantee (PSG)

Brief description of how this product works…

Supply of Goods

& Services

1

2

Requests Guarantee

3

3.1 Issues PSG Product

Instruction to Issue a Guarantee 3

SCOTIABANK CUSTOMER

PURCHASER

Issuance of Performance Security Guarantee (PSG)

Benefits

PSG Overview

What is it?

Foreign Bank

Issue Guarantee4

5

Issu

es

Lo

cal G

uara

nte

e

PSG Overview









SOLUTIONS



Commodity Financing



What is it ? • FSG is a 100% irrevocable second-demand guarantee

issued by EDC to support a bank’s financial SBLC or guarantees

• It supports an exporters’ financial payment obligations in the following scenario:

How does it work? (see flow chart)

• EDC guarantees the SBLC covering 100% of losses if the buyer, for any reason, makes a demand against the bank’s instrument (LG/SBLC).

EDC PRODUCTSFinancial Security Guarantee (FSG)

Collateral to a foreign (or local) supplierto obtain extended payment terms.

If an exporter requests its foreign supplier for longer payment terms for its purchases usually the supplier requires some type of guarantee. In this scenario, a bank issues a SBLC and obtains a FSG from EDC for 100% of the transaction.

What is It ?

Why use it ?

Scenario 1

Scenario 2









SOLUTIONS



Commodity Financing



EDC PRODUCTSFinancial Security Guarantee (FSG)

1

2

4

Request Guarantee

3

3.1 Issue FSG Product

Inst

ruct

ion

to Is

sue

a G

uara

ntee

Issue Guarantee

3

SCOTIABANKCUSTOMER

VENDOR

Issuance of Financial Security Guarantee (FSG)

CANADA FOREIGN COUNTRYExtends payment terms (30 – 180 days)

Collateral to foreign suppliers to obtain better payment terms

What is It ?

Why use it ?

Scenario 1

Scenario 2

Foreign Bank

Pro

vide

s F

inan

cing

5









SOLUTIONS



Commodity Financing



What is it ?

• A 100% Guarantee of a foreign exchange contract facility for an exporter.

• Foreign Exchange Guarantee supports FX contracts related to foreign transaction domestic purchases (domestic supplier to a domestic seller if it is shown that the goods in question are to be 100% exported).

How does it work? • The customer requests a bank to establish a FX

facility and EDC to issue the guarantee in favor of the bank.

Why use it ? • The FXG will replace the collateral, and by doing

so, increase a bank’s capacity to provide additional support to the exporter.

What is It ?

Benefits

FXG Overview

EDC PRODUCTSForeign Exchange Guarantee (FXG)









SOLUTIONS



Commodity Financing



EDC PRODUCTSForeign Exchange Guarantee (FXG)

The Bank receives a 100% guarantee from EDC

The Exporter signs the EDC Application and obtains a FX

facility from Scotiabank

The Bank returns the letter of

offer duly signed

EDC provides approval directly to the

Bank

EXPORTER

1

1

The Exporter submits all other required information

3

4

The Exporter (or the Bank) pays the FXG fee

5

6

2

What is It ?

Benefits

FXG OverviewFXG Overview









SOLUTIONS



Commodity Financing



EDC PRODUCTSAccounts Receivables Insurance (ARI)

What is it ? • This program protects the Exporter against non-

payment of their accounts receivable for up to 90% of losses resulting from a wide range of commercial and political risks.

• It is an excellent solution for Canadian exporters selling on open account terms.

• Exporter presents an application to EDC and this if approved provides a Letter of Offer with coverage criteria.

• Upon Exporter acceptance, the policy is activated and the policy documents are sent to the Exporter.

• At the request of the client EDC establishes an insurance policy in favour of a bank.

• The standard ARI policy protects the Exporter against: - Buyer insolvency; - Buyer payment default; - Buyer repudiation (where buyer refuses to accept the

goods); - Contract cancellation (if contract coverage is in place); - Currency transfer risk (buyer's inability to transfer hard

currency out of the country); - Cancellation of export or import permits; and - War, revolution or insurrection

• A bank establishes a W/C facility in favor of the Exporter based onits foreign account receivables. The amount of the facility is increased if the A/Rs are insured by EDC or other insurance.

How does it work? ARI Overview

Benefits

What is It ?









SOLUTIONS



Commodity Financing



Insu

ranc

e to

A/R

EDC PRODUCTSAccounts Receivables Insurance (ARI)

W/C in favour of Exporter

A/R from multiple Buyers

ARI Overview

Benefits

What is It ?

ARI Overview







Documents

EXPAND YOUR BUSINESS INTERNATIONALLY FINANCING SUPPORT TO ORGANIZATION OF WOMEN IN INTERNATIONAL TRADE